In a very short order, the US Court of Appeals for the Third Circuit denied the request filed by certain public interest groups that had asked that the Court stop the new FCC ownership rules from taking effect and suggesting that a special master be appointed to oversee the FCC’s ownership review process. We wrote about that request, filed as an Emergency Petition for Mandamus, here. If it had been adopted, the changes to the rules on broadcast-newspaper cross-ownership and other changes to the ownership rules that we detailed here would not have gone into effect on February 7, as expected. However, the denial of the stay does not end the case.
Instead, the public interest groups can continue their appeal of the FCC decision and present the Court with arguments as to why the decision should be overturned. The principle basis of the appeal seems to be that the FCC did not, before the new rules were adopted, adequately address how to encourage a more diverse ownership base in the broadcast industry. The Third Circuit, in previous ownership appeals, had faulted the FCC for not taking this issue into account. In yesterday’s ruling, the Court recognized that the FCC has agreed to implement an incubator program to encourage more diversity in ownership. The Court put the appeal on hold for 6 months while the FCC takes comments on how to implement the incubator program and presumably takes some action on those comments (see our summary of the questions asked by the FCC about the incubator program here). Given this delay, and the time that it will take to file briefs and argue the case, the appeal itself will be unlikely to be decided until next year. In the interim, the new rules are in effect, but any deals done in reliance on those rules are theoretically subject to any ruling that the court may make when it considers the merits of the appeal. Something for broadcasters who make deals in reliance on the change need to keep in mind.